Fiscal multipliers in recession and expansion. An analysis for the Italian regions

Gianluigi Coppola, Sergio Destefanis, Mario Di Serio and Matteo Fragetta ()

Structural Change and Economic Dynamics, 2024, vol. 71, issue C, 538-556

Abstract: This paper estimates the multipliers of two types of government spending in the 20 Italian administrative regions throughout 1960–2017, distinguishing between phases of expansion and recession. We derive regime- and region-specific multipliers through a nonlinear Bayesian heterogeneous panel threshold VAR model and provide a wide-ranging sensitivity analysis. We find that both government consumption and government investment multipliers are higher in recession than in expansion. In almost every region, government investment multipliers exceed unity in recession phases and are generally higher than their government consumption counterparts regardless of the business cycle. An exploratory analysis of the region-specific multipliers suggests that the difference between the region-specific multipliers in recession and expansion is positively associated with structural labour slack and negatively associated with trade openness. Factors related to the quality of local institutions, such as corruption and the relative size of the informal economy, also have a negative impact.

Keywords: Fiscal shocks; Regional multipliers; Asymmetric effects; Government spending categories; Bayesian heterogeneous panel threshold VAR (search for similar items in EconPapers)
JEL-codes: C33 E62 H50 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0954349X24001255
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:71:y:2024:i:c:p:538-556

DOI: 10.1016/j.strueco.2024.08.012

Access Statistics for this article

Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().